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A majority of economists have shot down Kevin Warsh’s bold claim that artificial intelligence will give the Fed enough room to lower interest rates without inflation picking up. According to a snap poll by the University of Chicago’s Clark Center and the Financial Times, nearly 60% of top economists say the impact of AI on inflation and borrowing costs over the next two years will be close to zero. This is a direct challenge to the main argument being used by Donald Trump’s choice for Fed chair. Kevin, nominated in late January to take over from Jay Powell in May, argues AI will spark “the most productivity enhancing wave of our lifetimes.” In his view, this would allow the Fed to slash interest rates from the current 3.5%–3.75% range without overheating the economy. But economists aren’t buying the pitch. Most of the 45 respondents in the survey expect AI to shave off less than 0.2% from both PCE inflation and the so-called neutral rate, the rate that doesn’t slow or speed up growth, over the next 24 months. Economists challenge Warsh’s view on AI’s short-term effects Jonathan Wright, an economist at Johns Hopkins and former Fed staffer, said, “I don’t think [the AI boom] is a disinflationary shock. I don’t think — over the near term — it’s very inflationary either.” About one-third of the economists polled actually believe AI could push the Fed to raise the neutral rate slightly. That completely undercuts Kevin’s suggestion that technology alone can justify lower rates. Kevin’s bet on AI comes as he tries to win over the rest of the Federal Open Market Committee (FOMC), the rate-setting body. That won’t be easy. Many inside the Fed, including Vice Chair for Monetary Policy Philip Jefferson, have warned that AI could temporarily raise inflation by…

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Filed under: News - @ February 8, 2026 5:19 pm